If you already plan to make a down payment, are there any advantages to paying the sales tax upfront than rolling it into the monthly payments? Only advantage I thought of (which may not be true) is that you owe the sales tax in the event the car is totaled?
Also, any idea if you’d pay the sales tax to the dealer if it’s upfront, or would you write a check to your state DMV? I’m leasing from a dealer in NJ but the car and taxes are for VA.
There no option to pay the sales tax up front in CA, other than the small amount of taxes due on any upfront cap cost reductions or taxable fees.
CA charges use tax at the time the cost (your payment) is incurred.
Sorry, I’m not in CA, messed up the tags.
Always better to keep $0 down with leases, except for one pay leases when you see significant savings and is worth taking the risk.
IMO.
It’s always worth quantifying this.
In states where tax is due up front, one can choose to capitalize that cost generally. Keeps you from paying it up front out of pocket, buy you do end up paying rent charge on the tax amount. That has a non-zero cost.
the only disadvantage to ‘rolling into the payments’ aka 0 Drive Off is that you pay sales tax and interest on anything you roll into the payments. (Yes you pay Sales Tax on the Sales Tax) (I don’t know the tax of VA, but that’s how it works)
The advantage is that if you total the car the next day, you are out 1 payment. (Or less if $0 Drive off)
BTW This does not apply to Toyota as they don’t have GAP insurance.
I don’t know about other states. I’m from GA and the law here is we have to pay taxes upfront on leases. When I roll this down to monthly, I see a $2-$3 difference between paying upfront and rolling it down to monthly, overall a $100 difference for 36 months. This all depends on the Money factor as well. I leased 3 cars before and noticed that and stopped paying upfront taxes. Before 2018, it was even worse. We used to pay taxes on sale price for leases.
Here is an example for Jeep wrangler 4*e with GA state taxes and fees.
With taxes paid upfront:
With taxes rolled into monthly payments:
You pay tax to the dealer, upfront or not.
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